2013 (12) TMI 509 - AT - Central Excise

Appropriate duty not paid on Nitrogen/Oxygen Plants - Whether fabrication of Nitrogen/Oxygen Plant amounts to manufacture and is liable to duty Held that - The plants were erected at the site by assembling the items - The appellant has never supplied plant in toto - the value of bought out items are not includible in the assessable value as same are neither spare parts or accessories to the items manufacture by the appellant - Nitrogen/Oxygen Plants were assembled at the customers place i.e. factory of the manufacturer not by the appellants - the appellants have not supplied the plants to their customers - the appellants have not supplied the plants but supplied only 4 items manufactured by them and they have discharged proper excise duty - the appellant is not liable to pay any duty Thus, confiscation of plant and imposition of duty is not sustainable Decided in favour of Assessee.

Summary

Issues:
Challenge to duty demand, imposition of penalty under Rule 26 of Central Excise Rules 2002, classification of goods under Chapter 84 of Central Excise Tariff Act, 1985, whether fabrication of Nitrogen/Oxygen Plants amounts to manufacture and is liable to duty, inclusion of bought out items in assessable value, applicability of Notification No.67/95-C.E., interpretation of relevant case laws.

Analysis:

1. Challenge to Duty Demand and Imposition of Penalty:
The main appellant contested the duty demand of Rs. 1,89,85,430/- for January 2005 to March 2009 and Rs.6,51,284/- for April 2009 to February 2010, along with penalty and confiscation of manufactured plant. Additionally, Shri Nitin Sanghi of the appellant company and another entity filed appeals for penalty under Rule 26 of the Central Excise Rules 2002.

2. Classification of Goods and Fabrication of Plants:
The applicants were involved in manufacturing goods classifiable under Chapter 84 of the Central Excise Tariff Act, 1985, including Air separation column/unit, Expansion engine, Liquid oxygen pump, and Liquid nitrogen pump. The dispute arose regarding the duty payment for Nitrogen/Oxygen Plants, with the Revenue arguing that fabrication of these plants amounts to manufacture, making them liable to duty.

3. Inclusion of Bought Out Items and Applicability of Notification:
The appellant's counsel argued that the bought out items, not directly supplied by the appellant but by third parties, should not be included in the assessable value. They contended that the plant's assembly at the customer's site did not make it an excisable good. The appellant also claimed exemption under Notification No.67/95-C.E. based on the premise that the capital goods were used in the manufacture of excisable goods.

4. Interpretation of Case Laws:
The AR opposed the appellant's contentions, citing case laws to support the position that the assembly of manufactured and bought out parts at the site amounts to manufacture and attracts duty liability. The AR relied on decisions like Narne Tulaman Manufacturers Pvt. Ltd., Mahindra & Mahindra Ltd., and others to argue that the plants constituted new commodities and were subject to duty.

5. Judgment and Conclusion:
After considering the submissions, the Tribunal found that the appellants had only supplied the 4 items manufactured by them and not the entire plants. As a result, the value of bought out items was not included in the assessable value. The Tribunal held that the duty demand and penalty were not sustainable as the appellants had paid excise duty on the items supplied. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief.

In conclusion, the Tribunal's decision favored the appellants by ruling that they were not liable to pay duty on the plants, as they had only supplied the items they manufactured and had already paid excise duty on those items.